Priority Company, which applies overhead to production on the basis of machine hours, reported the following data for the period just ended:
Actual units produced: 9,000
Actual variable overhead incurred: $54,400
Actual machine hours worked: 16,000
Standard variable overhead cost per machine hour: $3.50
If Priority estimates two hours to manufacture a completed unit, the company's variable-overhead efficiency variance is:
A) $1,600 favorable.
B) $1,600 unfavorable.
C) $7,000 favorable.
D) $7,000 unfavorable.
E) None of the answers is correct.

Question

Quizplus · Accepted Answer

The Answer of Priority Company, which applies overhead to production on the basis of machine hours, reported the following data for the period just ended:
Actual units produced: 9,000
Actual variable overhead incurred: $54,400
Actual machine hours worked: 16,000
Standard variable overhead cost per machine hour: $3.50
If Priority estimates two hours to manufacture a completed unit, the company's variable-overhead efficiency variance is:
A) $1,600 favorable.
B) $1,600 unfavorable.
C) $7,000 favorable.
D) $7,000 unfavorable.
E) None of the answers is correct.

Priority Company, Which Applies Overhead to Production on the Basis